Redundancy Pay in the United Kingdom
Reviewed by the Commoner Law Editorial Team. Sourced from UK Acts of Parliament, statutory instruments, and official guidance. Written in plain language for general understanding — this is educational content, not legal advice. Our editorial standards
What is this right?
Redundancy is a specific legal thing — not just a polite word for 'we don't want you'. The role itself has to be disappearing: the business is closing, the workplace is closing, or there's less work of the kind you do. If they're hiring someone else to do your job, that's a sham redundancy, and it's unfair dismissal.
Where it's a genuine redundancy and you've got the service, you get statutory redundancy pay. The formula keys off your age, your weekly pay (capped at £751 per week from 6 April 2026), and your years of service (capped at 20):
- Under 22: half a week's pay per year of service
- 22 to 40: one week's pay per year of service
- 41 and over: one and a half weeks' pay per year of service
The statutory maximum is £22,530. Your contract may give you more — many do, particularly in larger employers and the public sector.
When does it apply?
- At least 2 years' continuous employment with the same employer.
- You're an employee, not a worker or self-employed contractor.
- The redundancy is genuine — the role is going, not being relabelled and handed to someone cheaper.
- If they offer you suitable alternative employment and you turn it down without good reason, you can lose the redundancy payment.
What to Do If You Are Being Made Redundant by a UK Employer
The first 48 hours after the announcement matter more than people realise. Get organised before you sign anything.
- Read your contract and staff handbook for any enhanced redundancy scheme — many employers pay above the statutory minimum.
- Your employer must consult with you individually before dismissing. If 20 or more roles are at risk in 90 days, collective consultation kicks in under TULRCA s.188 — 30 days if 20-99 roles, 45 days if 100+.
- Ask for the selection criteria in writing. They must be objective (length of service, skills, attendance, performance) and not a back-door way to dismiss someone the manager doesn't like.
- You get reasonable paid time off to look for work or arrange training during your notice period.
- Statutory redundancy pay is tax-free, and the first £30,000 of any additional ex gratia payment is also tax-free under section 401 of ITEPA 2003.
What should you NOT do?
- Don't accept a 'redundancy' that smells fake. If they advertise your old role two months later, that's evidence of unfair dismissal, not redundancy.
- Don't sign a settlement agreement without independent legal advice. By statute the employer has to pay a contribution — typically £500-£750 plus VAT — toward your solicitor's fee. Use it.
- Don't reject suitable alternative work out of hand. You're entitled to a 4-week statutory trial period in the new role; turning down something genuinely suitable can wipe out your payment entirely.
Common Questions
When does redundancy pay apply?
At least 2 years' continuous employment with the same employer.You're an employee, not a worker or self-employed contractor.The redundancy is genuine — the role is going, not being relabelled and handed to someone cheaper.If they offer you suitable alternative employment and you turn it down without good reason, you can lose the redundancy payment.
What should I do if my UK employer is making me redundant?
The first 48 hours after the announcement matter more than people realise. Get organised before you sign anything.Read your contract and staff handbook for any enhanced redundancy scheme — many employers pay above the statutory minimum.Your employer must consult with you individually before dismissing. If 20 or more roles are at risk in 90 days, collective consultation kicks in under TULRCA s.188 — 30 days if 20-99 roles, 45 days if 100+.Ask for the selection criteria in writing. They must be objective (length of service, skills, attendance, performance) and not a back-door way to dismiss some...
What mistakes should I avoid with redundancy pay?
Don't accept a 'redundancy' that smells fake. If they advertise your old role two months later, that's evidence of unfair dismissal, not redundancy.Don't sign a settlement agreement without independent legal advice. By statute the employer has to pay a contribution — typically £500-£750 plus VAT — toward your solicitor's fee. Use it.Don't reject suitable alternative work out of hand. You're entitled to a 4-week statutory trial period in the new role; turning down something genuinely suitable can wipe out your payment entirely.